UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




FORM 10-Q


(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

March 31, 2024


or


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to

_________

Commission File No.Number: 001-39486


QUANTUM-SI INCORPORATED
(Exact name of registrant as specified in its charter)



HIGHCAPE CAPITAL ACQUISITION CORP.
(Exact name of registrant as specified in its charter)

Delaware
 85-1388175
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)


452 Fifth Avenue, 21st Floor

New York, New York 10018

29 Business Park Drive
Branford, Connecticut06405
(Address of Principal Executive Offices, including zip code)principal executive offices)(Zip Code)

(646) 793-3510
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)


(866) 688-7374
(Registrant’s telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class 
Trading
Symbol(s)
 Name of each exchange on which
registered
Units, each consisting of one share of Class A common stock, and one-third of one redeemable warrant$0.0001 per share
 CAPAUQSI
 The Nasdaq Stock Market LLC
Class A common stock, par value $0.0001 per shareCAPAThe Nasdaq Stock Market LLC
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share
 CAPAW
QSIAW
 
The Nasdaq Stock Market LLC


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


¨
Large accelerated filer
¨
Accelerated filer
x
Non-accelerated filer
x
Smaller reporting company

 x
Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):. Yes x No ¨


As of November 12, 2020, there were 11,905,000May 3, 2024, the registrant had 121,878,989 shares of Class A common stock outstanding and 2,875,00019,937,500 shares of Class B common stock ofoutstanding.



QUANTUM-SI INCORPORATED
FORM 10-Q
For the registrant issued and outstanding.

quarterly period ended March 31, 2024


HIGHCAPE CAPITAL ACQUISITION CORP.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS


  Page
PART 1 – FINANCIAL INFORMATION2

 
Part I3
   
Item 1.3
Item 1.Condensed Financial Statements 1
   
 13
   
 24
   
 35
   
 46
   
 57
   
Item 2.1421
   
Item 3.1626
   
Item 4.1626
   
PARTPart II – OTHER INFORMATION27
   
Item 1.1727
   
Item 1A.1727
   
Item 2.1727
   
Item 3.1727
   
Item 4.1727
   
Item 5.1727
   
Item 6.1728
   
1929

i


PART I – FINANCIAL INFORMATION

ITEM 1.  CONDENSED FINANCIAL STATEMENTS

HIGHCAPE CAPITAL ACQUISITION CORP.

CONDENSED BALANCE SHEET

SEPTEMBER 30, 2020

(Unaudited)

ASSETS    
Current assets    
Cash $1,164,723 
Prepaid expenses  174,605 
Total Current Assets  1,339,328 
     
Cash and cash equivalents held in Trust Account  115,000,384 
TOTAL ASSETS $116,339,712 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities    
Accounts payable and accrued expenses $43,342 
Accrued offering costs  45,000 
Total Current Liabilities  88,342 
     
Deferred underwriting fee payable  4,025,000 
Total Liabilities  4,113,342 
     
Commitments and Contingencies    
     
Class A common stock subject to possible redemption, 10,722,636 shares at $10.00 per share  107,226,360 
     
Stockholders’ Equity    
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding   
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 1,182,364 issued and outstanding (excluding 10,722,636 shares subject to possible redemption)  118 
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 2,875,000 shares issued and outstanding  288 
Additional paid-in capital  5,050,857 
Accumulated deficit  (51,253)
Total Stockholders’ Equity  5,000,010 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $116,339,712 

The accompanying notes are an integral part of

In this Quarterly Report on Form 10-Q, the unaudited condensed financial statements.


HIGHCAPE CAPITAL ACQUISITION CORP.

CONDENSED STATEMENT OF OPERATIONS

(Unaudited)

  Three Months
Ended
September 30,
  For the Period
from June 10,
2020 (Inception)
Through
September 30,
 
  2020  2020 
Formation and general and administrative expenses $50,637  $51,637 
Loss from operations  (50,637)  (51,637)
         
Other income:        
Interest earned on cash and cash equivalents held in Trust Account  384   384 
         
Net loss $(50,253) $(51,253)
         
Weighted average shares outstanding of Class A redeemable common stock  11,500,000   11,500,000 
Basic and diluted income per share, Class A redeemable common stock $0.00  $0.00 
         
Weighted average shares outstanding of Class A and Class B non-redeemable common stock  3,280,000   3,280,000 
Basic and diluted net loss per share, Class A and Class B non-redeemable common stock $(0.02) $(0.02)

The accompanying notes are an integral part ofterms “we”, “us”, “our”, the unaudited condensed financial statements.

2

HIGHCAPE CAPITAL ACQUISITION CORP.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE PERIOD FROM JUNE 10, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

  Class A  Class B  Additional     Total 
  Common Stock  Common Stock  Paid-in  Accumulated  Stockholders’ 
  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
Balance – June 10, 2020 (inception)    $     $  $  $  $ 
                             
Issuance of Class B common stock to Sponsors        2,875,000   288   24,712      25,000 
                             
Net loss                 (1,000)  (1,000)
                             
Balance – June 30, 2020        2,875,000   288   24,712   (1,000)  24,000 
                             
Sale of 11,500,000 Units, net of underwriting discounts  11,500,000   1,150         108,201,473      108,202,623 
                             
Sale of 405,000 Private Placement Units  405,000   41         4,049,959      4,050,000 
                             
Common stock subject to possible redemption  (10,722,636)  (1,073)        (107,225,287)     (107,226,360)
                             
Net loss                 (50,253)  (50,253)
                             
Balance – September 30, 2020  1,182,364  $118   2,875,000  $288  $5,050,857  $(51,253) $5,000,010 

The accompanying notes are an integral part of the unaudited condensed financial statements.

3

HIGHCAPE CAPITAL ACQUISITION CORP.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM JUNE 10, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

Cash Flows from Operating Activities:    
Net loss $(51,253)
Adjustments to reconcile net loss to net cash used in operating activities:    
Interest earned on marketable securities held in Trust Account  (384)
Changes in operating assets and liabilities:    
Prepaid expenses  (174,605)
Accrued expenses  43,342 
Net cash used in operating activities  (182,900)
     
Cash Flows from Investing Activities:    
Investment of cash into Trust Account  (115,000,000)
Net cash used in investing activities  (115,000,000)
     
Cash Flows from Financing Activities:    
Proceeds from issuance of Class B common stock to Sponsor  25,000 
Proceeds from sale of Units, net of underwriting discounts paid  112,700,000 
Proceeds from sale of Private Placement Units  4,050,000 
Repayment of promissory note - related party  (99,627)
Payment of offering costs  (327,750)
Net cash provided by financing activities  116,347,623 
     
Net Change in Cash  1,164,723 
Cash – Beginning of period   
Cash – End of period $1,164,723 
     
Supplemental Disclosure of Non-Cash Investing and Financing Activities:    
Offering costs included in accrued offering costs $45,000 
Initial classification of Class A common stock subject to possible redemption $107,276,620 
Change in value of Class A common stock subject to possible redemption $(50,260)
Deferred underwriting fee payable $4,025,000 
Payment of deferred offering costs through promissory note – related party $99,627 

The accompanying notes are an integral part of the unaudited condensed financial statements.


HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited) 

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

HighCape Capital Acquisition Corp. (the “Company”) or “Quantum-Si” mean Quantum-Si Incorporated and our subsidiaries. Quantum-Si Incorporated was incorporated in Delaware on June 10, 2020. The Company was formed for the purpose


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on September 3, 2020. On September 9, 2020 the Company consummated the Initial Public Offering of 11,500,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), whichForm 10-Q includes the full exercise by the underwriters of their over-allotment option in the amount of 1,500,000 Units, at $10.00 per Unit, generating gross proceeds of $115,000,000 which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 405,000 units (the “Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to HighCape Capital Acquisition, LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,050,000, which is described in Note 4.

Transaction costs amounted to $6,797,377, consisting of $2,300,000 of underwriting fees, $4,025,000 of deferred underwriting fee and $472,377 of other offering costs. In addition, at September 9, 2020, cash of $1,419,450 was held outside of the Trust Account (as defined below) and is available for working capital purposes.

Following the closing of the Initial Public Offering on September 9, 2020, an amount of $115,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”) located in the United States and will be invested only in U.S. government securities,forward-looking statements within the meaning set forth inof Section 2(a)(16)27A of the Investment CompanySecurities Act of 1940,1933, as amended (the “Investment Company“Securities Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.

The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.


HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and any other holders of the Company’s common stock prior to the Initial Public Offering (the “initial stockholders”) have agreed to vote their Founder Shares (as defined in Note 5), Private Placement Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.

If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 1321E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), that relate to future events, our future operations or financial performance, or our plans, strategies and prospects. These statements are based on the beliefs and assumptions of our management team. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure that we will be restrictedachieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or performance, are forward-looking statements. The actual results may differ from redeeming its sharesexpectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, our expectations with respect to morefuture performance and development and commercialization of products and services. The forward-looking statements are based on projections prepared by, and are the responsibility of, management and involve significant risks and uncertainties that could cause the actual results to differ materially from those discussed in the forward-looking statements. Most of these factors are outside our control and are difficult to predict. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:


the impact of pandemics or epidemics on our business;
the inability to maintain the listing of our Class A common stock on The Nasdaq Stock Market LLC;
changes in applicable laws or regulations;
our ability to raise financing in the future;
the success, cost and timing of our product development and commercialization activities;

the commercialization and adoption of our existing products, including the Platinum® protein sequencing instrument, and the success of any product we may offer in the future;
our ability to obtain and maintain regulatory approval for its products, and any related restrictions and limitations of any approved product;
our ability to identify, in-license or acquire additional technology;
our ability to maintain our existing lease, license, manufacture and supply agreements;
our ability to compete with other companies currently marketing or engaged in the development or commercialization of products and services that serve customers engaged in proteomic analysis, many of which have greater financial and marketing resources than an aggregate of 20%us;
the size and growth potential of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed (a)markets for our products and services, and its ability to waive its redemption rightsserve those markets once commercialized, either alone or in partnership with respect to the Founder Shares, Private Placement Sharesothers;

our estimates regarding future expenses, future revenue, capital requirements and Public Shares held by it in connection with the completion of a Business Combinationneeds for additional financing; and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company���s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

The Company will have until September 9, 2022 to complete a Business Combination (the “Combination Period”). If the Company has not completed a Business Combination by the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then

our financial performance.

These forward-looking statements are based on deposit in the Trust Account, including interest (net of permitted withdrawals and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares and Private Placement Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will beinformation available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of this report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Important factors could cause actual results, performance or achievements to differ materially from those indicated or implied by forward-looking statements such as those described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the liquidationfiscal year ended December 31, 2023, in Part II, Item 1A of this Quarterly Reports on Form 10-Q, and in other filings that we make with the Securities and Exchange Commission. The risks described under the heading “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the Trust Account, if less than $10.00date hereof. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


2

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and par value amounts)

  
(unaudited)
March 31,
2024
  
December 31,
2023
 
Assets      
Current assets:      
Cash and cash equivalents 
$
53,163
  
$
133,860
 
Marketable securities  182,268   123,876 
Accounts receivable, net of allowance of $0 and $0, respectively  242   368 
Inventory, net
  4,946   3,945 
Prepaid expenses and other current assets  
3,756
   
4,261
 
Total current assets  244,375   266,310 
Property and equipment, net  
16,169
   
16,275
 
Internally developed software
  496   532 
Operating lease right-of-use assets  
13,850
   
14,438
 
Other assets  695   695 
Total assets $275,585  $298,250 
Liabilities and stockholders’ equity
        
Current liabilities:        
Accounts payable 
$
1,164
  
$
1,766
 
Accrued payroll and payroll-related costs
  2,103   4,943 
Accrued contracted services
  1,212   1,519 
Accrued expenses and other current liabilities  
1,883
   
1,815
 
Current portion of operating lease liabilities
  1,610   1,566 
Total current liabilities  7,972   11,609 
Warrant liabilities  955   1,274 
Operating lease liabilities
  12,873   13,737 
Other long-term liabilities  14   11 
Total liabilities  21,814   26,631 
         
Commitments and contingencies (Note 15)      
         
Stockholders’ equity
        
Class A Common stock, $0.0001 par value; 600,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 121,878,989 and 121,832,417 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
  
12
   
12
 
Class B Common stock, $0.0001 par value; 27,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 19,937,500 shares issued and outstanding as of March 31, 2024 and December 31, 2023
  
2
   
2
 
Additional paid-in capital  
768,898
   
767,239
 
Accumulated other comprehensive loss
  (33)  - 
Accumulated deficit  (515,108)  (495,634
)
Total stockholders’ equity
  253,771   271,619 
Total liabilities and stockholders’ equity
 $275,585  $298,250 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 (in thousands, except per public Share due to reductions share amounts)
(unaudited)

  Three months ended March 31, 
  2024
  2023
 
Revenue:      
Product $428  $251 
Service  29   3 
Total revenue
  457   254 
         
Cost of revenue
  188   130 
         
Gross profit
  269   124 
Operating expenses:        
Research and development  12,101   18,167 
Selling, general and administrative  11,528   11,178 
Total operating expenses  23,629   29,345 
Loss from operations  (23,360)  (29,221)
Dividend and interest income  3,574   2,219 
Gain on marketable securities, net
  -   2,942 
Change in fair value of warrant liabilities  319   391 
Other (expense) income, net  (7)  58 
Loss before provision for income taxes  (19,474)  (23,611)
Provision for income taxes  -   - 
Net loss
 $(19,474) $(23,611)
         
Net loss per common share attributable to common stockholders, basic and diluted $(0.14) $(0.17)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted  141,773
   140,280
 
         
Other comprehensive loss:
        
Net unrealized loss on marketable securities, net of tax
 $(28) $- 
Foreign currency translation adjustment
  (5)  - 
Total other comprehensive loss, net of tax
  (33)  - 
Comprehensive loss
 $(19,507) $(23,611)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in the valuethousands, except share amounts)
(unaudited)

  Class A common stock  Class B common stock  Additional
paid-in
  Accumulated  
Total
stockholders’
 
  Shares  Amount  Shares  Amount  capital  deficit  
equity
 
Balance - December 31, 2022
  120,006,757  $12   19,937,500  $2  $758,366  $(399,674) $358,706 
Common stock issued upon vesting of restricted stock units
  1,552,583   -   -   -   -   -   - 
Stock-based compensation
  -   -   -   -   3,908   -   3,908 
Net loss  -   -   -   -   -   (23,611)  (23,611)
Balance - March 31, 2023
  121,559,340  $12   19,937,500  $2  $762,274  $(423,285) $339,003 

  Class A common stock  Class B common stock  Additional
paid-in
  
Accumulated
other
compehensive
  Accumulated  
Total
stockholders’
 
  Shares  Amount  Shares  Amount  capital  loss  deficit  
equity
 
Balance - December 31, 2023
  121,832,417  $12   19,937,500  $2  $767,239  $-  $(495,634) $271,619 
Common stock issued upon vesting of restricted stock units  46,572   -   -   -   -   -   -   - 
Stock-based compensation
  -   -   -   -   1,645   -   -   1,645 
Net unrealized loss on marketable securities, net of tax
  -   -   -   -   -   (28)  -   (28)
Refund of issuance costs from 2021 Business Combination
  -   -   -   -   14   -   -   14 
Foreign currency translation
  -   -   -   -   -   (5)  -   (5)
Net loss  -   -   -   -   -   -   (19,474)  (19,474)
Balance - March 31, 2024
  121,878,989  $12   19,937,500  $2  $768,898  $
(33) $(515,108) $253,771 

The accompanying notes are an integral part of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiverthese unaudited Condensed Consolidated Financial Statements.

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in the Trust Account nor will it apply to any claims under the Company’s indemnitythousands)
(unaudited)

  Three Months Ended March 31,
 
  2024
  2023
 
Cash flows from operating activities:      
Net loss 
$
(19,474
)
 
$
(23,611
)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization
  1,061   803 
Non-cash lease expense
  588
   536 
(Gain) loss on marketable securities, net
  -   (2,942)
(Accretion) amortization on marketable securities
  (2,119)  - 
(Gain) loss on disposal of fixed assets
  -   3 
Change in fair value of warrant liabilities  (319)  (391)
Change in fair value of contingent consideration  -   34
 
Stock-based compensation  1,645   3,908 
Other
  22   - 
Changes in operating assets and liabilities:        
Accounts receivable, net  126   (82)
Inventory, net
  (228)  (1,708)
Prepaid expenses and other current assets  31   738 
Accounts payable  (633)  (730)
Accrued expenses and other current liabilities  (3,094)  (4,537)
Operating lease liabilities
  (820)  (743)
Other long-term liabilities  6   24 
Net cash used in operating activities 
(23,208) 
(28,698)
Cash flows from investing activities:        
Purchases of property and equipment  (1,046)  (2,574)
Internally developed software - capitalized costs
  (59)  (887)
Purchases of marketable securities  (78,823)  - 
 Sales of marketable securities  22,500   29,500 
Net cash (used in) provided by investing activities
 
(57,428) 
26,039 
Cash flows from financing activities:        
Deferred offering costs
  (70)  - 
Refund of issuance costs from 2021 Business Combination  14   - 
Net cash used in financing activities 
(56) 
- 
Effect of exchange rate changes on cash and cash equivalents  (5)  - 
Net decrease in cash and cash equivalents
  (80,697)  (2,659)
Cash and cash equivalents at beginning of period  133,860   84,319 
Cash and cash equivalents at end of period
 $53,163  $81,660 

        
Supplemental disclosure of cash flow information:        
Cash paid for income taxes $
16  $
- 
Supplemental disclosure of non-cash investing and financing activities:
        
Property and equipment purchased but not paid
 
$
231  $847 
Deferred offering costs payable
 $
75  $
- 

The accompanying notes are an integral part of the underwritersthese unaudited Condensed Consolidated Financial Statements.

QUANTUM-SI INCORPORATED

HIGHCAPE CAPITAL ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30,
(Unaudited)

Note 1. Organization and Description of Business

Quantum-Si Incorporated (including its subsidiaries, the “Company” or “Quantum-Si”) was incorporated in Delaware on June 10, 2020
(Unaudited)

NOTE as HighCape Capital Acquisition Corp. The Company’s legal name became Quantum-Si Incorporated following a business combination on June 10, 2021 between the Company and Q-SI Operations Inc. (formerly Quantum-Si Incorporated), which was founded in 2013.


The Company is an innovative life sciences company with the mission of transforming single-molecule analysis and democratizing its use by providing researchers and clinicians access to the proteome, the set of proteins expressed within a cell. The Company has developed a proprietary universal single-molecule detection platform that the Company is first applying to proteomics to enable Next-Generation Protein SequencingTM (“NGPS”), the ability to sequence proteins in a massively parallel fashion (rather than sequentially, one at a time), and can be used for the study of nucleic acids. The Company’s platform is currently comprised of the Platinum® NGPS instrument, the Platinum Analysis Software service, reagent kits and semiconductor chips for use with its instruments.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

Basis of Presentation

and Principles of Consolidation

The accompanying unaudited condensed financial statementsCondensed Consolidated Financial Statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the accounting disclosure rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the informationSecurities and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, whichExchange Commission (the “SEC”). All intercompany transactions are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statementseliminated.


These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statementsConsolidated Financial Statements and the notes thereto included in the Company’s final prospectus for its Initial Public Offering as filed with the SEC on September 4, 2020, as well as the audited balance sheet included in the Company’s CurrentAnnual Report on Form 8-K,10-K for the year ended December 31, 2023. The Condensed Consolidated Balance Sheets as filed withof December 31, 2023 included herein was derived from the SECaudited Consolidated Financial Statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP, on September 9, 2020an annual reporting basis.

In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and September 15, 2020.cash flows for the interim periods. The interim results for the three months ended September 30, 2020 and for the period from June 10, 2020 (inception) through September 30, 2020March 31, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 20202024, or any other period.

There have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for any future interim periods.

Emerging Growth Company

The Company is an “emerging growth company,” as definedthe year ended December 31, 2023.

Global Developments
Throughout 2023, various central banks around the world, including the Federal Reserve in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those thatUnited States, raised interest rates. While these rate increases have not had a Securities Act registration statement declared effectivesignificant adverse impact on the Company to date, the impact of such rate increases on the overall financial markets and the economy may adversely impact the Company in the future. In addition, the global economy has experienced, and is continuing to experience, high levels of inflation and global supply chain disruptions. The Company continues to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.


Although the Company does not expect to be significantly impacted by the conflicts in Ukraine or do not have a class of securities registered underIsrael and Gaza, the Exchange Act) areCompany has experienced some constraints in product and material availability and increasing costs required to comply withobtain some materials and supplies as a result of these conflicts on the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison ofglobal economy. To date, the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company whichbusiness has opted out of usingnot been materially impacted by the extended transition period difficultconflicts, however, as the conflicts continue or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2020.

Class A Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely withinworsen, it may impact the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2020, Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheet.


HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Offering Costs

Offering costs consist of underwriting, legal, accounting and other expenses incurred through the Initial Public Offering that are directly related to the Initial Public Offering. Offering costs amounting to $6,797,377 were charged to stockholders’ equity upon the completion of the Initial Public Offering.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between thebusiness, financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September 30, 2020, the Company had a deferred tax asset of approximately $11,000, due to start-up and organizational expenses, which had a full valuation allowance recorded against it of approximately $11,000.

The Company’s currently taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the three months ended September 30, 2020 and for period from June 10, 2020 (inception) through September 30, 2020, the Company recorded no income tax expense. The Company’s effective tax rate for the three months ended September 30, 2020 and for the period from June 10, 2020 (inception) through September 30, 2020 was zero, which differs from the expected income tax rate due to the start-up costs (discussed above) which are not currently deductible.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. 

Net Income (Loss) Per Common Share

Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. The Company has not considered the effect of warrants, sold in the Initial Public Offering and in the sale of the Private Placement Units, to purchase 3,968,333 shares of Class A common stock in the calculation of diluted income (loss) per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The Company’s unaudited condensed statementscondition, results of operations include a presentation of income (loss) per share for common shares subject to redemption in a manner similar to the two-class method of income per share. Net income per common share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account of $384 for the three months ended September 30, 2020 and for the period from June 10, 2020 (inception) through September 30, 2020, less applicable franchise taxes of approximately $17,000 for the three months ended September 30, 2020 and for the period from June 10, 2020 (inception) through September 30, 2020, by the weighted average number of Class A redeemable common stock since issuance. Net loss per common share, basic and diluted for Class A and Class B non-redeemable common stock is calculated by dividing the net income (loss), less income attributable to Class A redeemable common stock, by the weighted average number of Class A and Class B non-redeemable common stock outstanding for the periods. Class B non-redeemable common stock includes the Founder Shares and Private Placement Units as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.

cash flows.

HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)


Concentration of CreditBusiness Risk

Financial instruments that potentially subject the Company to concentrationsconcentration of credit risk consist principally of cash and cash equivalents and marketable securities. As of March 31, 2024, the Company’s marketable securities consist of mutual funds, U.S. Treasury securities and commercial paper. The Company also maintains balances in certain operating accounts above federally insured limits and, as a cashresult, the Company is exposed to credit risk in the event of default by the financial institutions to the extent account in a financial institution, which, at times, maybalances exceed the amount insured by the Federal DepositoryDeposit Insurance CoverageCorporation.
The Company sources certain key materials and components utilized in the Company’s products from single or limited suppliers. Historically, the Company has not experienced lossessignificant issues sourcing these materials and components. However, if these suppliers were not able to supply the requested amount of materials or components, it could take a considerable length of time to obtain alternative sources, which could affect the Company’s development efforts and commercial operations.

Segment Reporting



The Company’s Chief Operating Decision Maker, its Chief Executive Officer, reviews the Company’s financial information on this accounta consolidated basis for purposes of allocating resources and management believesevaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment.

Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year’s presentation.

Use of Estimates
The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions about future events that affect the amounts recorded in its Condensed Consolidated Financial Statements and accompanying notes. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates and assumptions. Significant estimates and assumptions include:


valuation allowances with respect to deferred tax assets;


inventory valuation;


valuation of excess and obsolete inventory reserves;


assumptions used for leases;


valuation of warrant liabilities;


assumptions associated with revenue recognition; and


assumptions underlying the fair value used in the calculation of stock-based compensation.

The Company bases these estimates on historical and anticipated results and trends and on various other assumptions the Company believes are reasonable under the circumstances, including assumptions as to future events. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates, and any such differences may be material to the Condensed Consolidated Financial Statements.

Inventory, Net


Inventory is stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. Materials that may be utilized for either commercial or, alternatively, for research and development purposes, are classified as inventory. Amounts in inventory used for research and development purposes are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have an “alternative future use” as defined in authoritative guidance.



The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and, if needed, records an excess and obsolete reserve against inventory to its estimated net realizable value in the period it is identified. For further discussion related to inventory, please refer to Note 5. Inventory, Net.

Warrant Liabilities

The Company’s outstanding warrants include publicly traded warrants (the “Public Warrants”) and warrants sold in a private placement (the “Private Warrants”). The Public Warrants and Private Warrants meet the definition of a derivative and the Company recorded these warrants as long-term liabilities in the Condensed Consolidated Balance Sheets at fair value upon initial recognition, with subsequent changes in their respective fair values recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss at each reporting date. For further discussion related to the Public Warrants and Private Warrants, please refer to Note 11. Warrant Liabilities.

Revenue Recognition

The Company’s revenue is derived from sales of products and services. Product revenue is primarily generated from the sales of instruments and consumables used in protein sequencing and analysis. Service revenue is primarily generated from service maintenance contracts including access to analysis software and advanced training for instrument use. The Company recognizes revenue when or as a customer obtains control of the promised goods and services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for these goods and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue as the performance obligations have been satisfied. The Company has made the accounting policy election allowed for under ASC 606-10-32-2A to exclude all sales taxes from transaction price. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company allocates transaction price to the performance obligations in a contract with a customer based on the relative standalone selling price of each performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not exposedobservable through past transactions, the Company estimates the standalone selling price taking into account available information and specific factors such as competitive positioning, internal costs, profit objectives, and internally approved pricing guidelines related to significant risksthe performance obligation

The Company considers performance obligation for sales of products satisfied upon shipment of the goods to the customer in accordance with the shipping terms (either upon shipment or delivery), which is when control of the product is deemed to be transferred; this includes instruments and consumables. Customers generally do not have a right to return products, except for defective or damaged products during the warranty period or unless prior written consent is provided. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenues for service maintenance contracts, which start after the first year of purchase and are considered as service type warranties that effectively extend the standard first-year service coverage at the customer’s option are recognized ratably over the contract service period as these services are performed evenly over time. Revenues for advanced training is recognized at a point in time upon satisfaction of the underlying performance obligation. The Company typically provides a standard one-year warranty which covers defects in materials, workmanship and manufacturing or performance conditions under normal use and service. The first year of the warranty of the products is considered an assurance-type warranty and is recorded as Cost of revenue within the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company has determined the standard first-year warranty is not a distinct performance obligation.

The Company disaggregates revenue from contracts with customers by type of revenue. The Company believes product revenue and service revenue aggregate the payor types by nature, amount, timing and uncertainty of its revenue streams. Total revenue generated from domestic and international sales was approximately $0.3 million and $0.2 million, respectively, for the three months ended March 31, 2024. All revenue generated for the three months ended March 31, 2023 resulted from domestic sales.

Deferred Revenue

Deferred revenue is a contract liability that consists of customer payments received in advance of performance or billings in excess of revenue recognized, net of revenue recognized from the balance at the beginning of the period.


Deferred revenue primarily consists of billings and payments received in advance of revenue recognition from service maintenance contracts including software subscription, proof of concept services and advanced training, and is reduced as the revenue recognition criteria are met. Deferred revenue also includes proof of concept services and advanced training provided to customers until the service has been performed. Deferred revenue is classified as current or non-current based on such account.

Fair Valueexpected revenue recognition timing. Specifically, deferred revenue that will be recognized as revenue within the succeeding 12-month period is recorded as current and is included within Accrued expenses and other current liabilities, and the portion of Financial Instruments

deferred revenue where revenue is expected to be recognized beyond 12 months from the reporting date is recorded as non-current deferred revenue and is included in Other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets.




As of March 31, 2024, the Company had deferred revenue of $0.1 million included within Accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets. As of March 31, 2024, amounts included within Other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets were immaterial. The Company expects to recognize approximately 30% of its remaining performance obligations as revenue for the remainder of the year ending December 31, 2024.
Stock-Based Compensation

Stock-based compensation expense for stock option grants with only service conditions is recognized on a straight-line basis over the requisite service period of the individual grants, which is generally the vesting period, based on the estimated grant date fair values. Stock-based compensation expense for stock option grants subject to non-financing event performance conditions on an accelerated basis is recognized as though each vesting portion of the award was, in substance, a separate award.

Prior to the business combination between HighCape Capital Acquisition LLC and Quantum-Si Incorporated in June 2021 (the “Business Combination”), the fair value of the shares of common stock underlying stock options had historically been determined by the Company’s board of directors (the “Board”), with input from management and contemporaneous third-party valuations, as there was no public market for the common stock. Given the absence of a public trading market for the Company’s common stock, the Board exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of the Company’s assetscommon stock at each option grant date.
 
After the completion of the Business Combination, the Company measures compensation expense for stock-based awards to employees, non-employees and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximatesdirectors based upon the carrying amounts represented inawards’ initial grant-date fair values. Stock-based compensation expense for stock options, restricted stock units and performance awards is recorded over the accompanying condensed balance sheet, primarily due to their short-term nature.

Recent Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would haverequisite service period. For awards with only a material effectservice condition, the Company expenses stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with a market condition, the Company expenses the grant date fair value at the target over the vesting period regardless of the value the award recipients ultimately receive. The fair value of restricted stock without a market condition is estimated using the current market price of the Company’s Class A common stock on the Company’s unaudited condensed financial statements.

NOTE 3. INITIAL PUBLIC OFFERING

Pursuantdate of grant. The fair value of stock option grants with a market condition is estimated at the date of grant using the Monte Carlo simulation model (“Monte Carlo”). The fair values of stock option grants are estimated as of the date of grant by applying the Black-Scholes option valuation model (“Black-Scholes”). The Black-Scholes and Monte Carlo models incorporate assumptions as to stock price volatility, the Initial Public Offering, the Company sold 11,500,000 Units, which included the full exerciseexpected life of options or restricted stock, a risk-free interest rate and dividend yield. The effect of forfeiture in compensation costs is recognized based on actual forfeitures when they occur.

Black-Scholes is affected by the underwritersstock price on the date of their over-allotmentthe grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, inexpected risk-free interest rate, the amount of 1,500,000 Units, at a price of $10.00 per Unit. Each Unit consists of one shareexpected volatility of Class A common stock, and one-thirdexpected dividend yield; each of one redeemablewhich is described below. The assumptions for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value.


Expected Term: The expected term using the “simplified” method, which is the simple average of the vesting period and the contractual term.


Risk-free Interest Rate: The risk-free interest rate for periods within the expected term of the awards is based on the U.S. Treasury yield curve in effect at the time of the grant.


Expected Stock Price Volatility: The Company determined expected annual equity volatility based on the historical volatility of its Class A common stock.


Dividend Yield: Because the Company has never paid a dividend and does not expect to begin doing so in the foreseeable future, the Company assumesno dividend yield in valuing the stock-based awards.


Exercise Price: The exercise price is taken directly from the grant notice issued to employees and nonemployees.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)Improvements to Income Tax Disclosures, which expands income tax disclosure requirements to include additional information related to the rate reconciliation of effective tax rates to statutory rates, as well as additional disaggregation of taxes paid in both U.S. and foreign jurisdictions. The amendments in ASU 2023-09 also remove disclosures related to certain unrecognized tax benefits and deferred taxes. The amendments are effective for fiscal years beginning after December 31, 2024. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating the effect ASU 2023-09 may have on its Consolidated Financial Statements and disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requiresenhanced disclosures about significant segment expenses. In addition, the ASU clarified that single reportable segment entities must apply Topic 280 in its entirely. The ASU does not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The ASU is required to be applied retrospectively to all periods presented in the financial statements and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the effect ASU 2023-07 may have on its Consolidated Financial Statements and disclosures.
Note 3. Investments in Marketable Securities

As of March 31, 2024 and December 31, 2023, the Company’s investments in marketable securities were determined to be available-for-sale securities. Gross unrealized gains or losses resulting from changes in the fair value of available-for-sale securities for the three months ended March 31, 2024 were less than $0.1 million. There were no such gains or losses for the three months ended March 31, 2023.

Dividend and interest income from marketable securities and realized and unrealized gain on marketable securities, net, related to the Company’s available-for sale securities for the three months ended March 31, 2024 and trading securities for the three months ended March 31, 2023 were as follows (in thousands):

       
  2024
  2023
 
Dividend and interest income from marketable securities $3,574  $2,219 
Gain on marketable securities, net $-  $2,942 



The following is a summary of the Company’s available-for-sale securities recorded within Marketable securities in the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (in thousands):


  March 31, 2024
 
  
Amortized
Costs
  
Gross
Unrealized
Gains
  
Gross
Unrealized
Losses
  
Fair
Value
 
Financial Assets:            
Short-term marketable securities:            
U.S. Treasury securities $151,538  $-  $(14) $151,524 
Commercial paper  30,758   -   (14)  30,744 
Total $182,296  $-  $(28) $182,268 


  December 31, 2023 
  
Amortized
Costs
  
Gross
Unrealized
Gains
  
Gross
Unrealized
Losses
  
Fair
Value
 
Financial Assets:            
Short-term marketable securities:            
U.S. Treasury securities $82,625  $15  $-  $82,640 
Commercial paper  41,229   7   -   41,236 
Total $123,854  $
22
  $-  $123,876 



The fair values of the Company’s available-for-sale securities included within Marketable securities in the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, by remaining contractual maturity, are as follows (in thousands):


  March 31, 2024
 
  
One Year
or Less
  
Over
One Year
Through
Five Years
  
Over
Five Years
  Total 
Financial Assets:            
Short-term marketable securities:            
U.S. Treasury securities $151,524  $-  $-  $151,524 
Commercial paper  30,744   -   -   30,744 
Total $182,268  $-  $-  $182,268 

  December 31, 2023 
  
One Year
or Less
  
Over
One Year
Through
Five Years
  
Over
Five Years
  Total 
Financial Assets:            
Short-term marketable securities:            
U.S. Treasury securities $82,640  $-  $-  $82,640 
Commercial paper  41,236   -   -   41,236 
Total $123,876  $-  $-  $123,876 

Note 4. Fair Value of Financial Instruments
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.
The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:


Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.


Level 2: Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.


Level 3: Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

The carrying value of cash and cash equivalents, accounts payable and accrued expenses and other current liabilities approximates their fair values due to the short-term or on demand nature of these instruments. At March 31, 2024 and December 31, 2023, the Company’s investment portfolio included available-for-sale securities which were comprised of money market funds, U.S. treasury bills and commercial paper. The majority of the Company’s cash equivalents and short-term investments consist of instruments classified as Level 1. However, the Company has commercial paper that is classified as Level 2 due to the fair value for these instruments being determined by utilizing observable inputs in similar assets or identical assets in non-active markets. There were no transfers between fair value measurement levels for the three months ended March 31, 2024 and 2023.

Warrants are recorded as Warrant liabilities in the Condensed Consolidated Balance Sheets. The warrant (“liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented as Change in fair value of warrant liabilities in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The Public Warrant”Warrants and Private Warrants were carried at fair value as of March 31, 2024 and December 31, 2023. The Public Warrants were valued using Level 1 inputs as they are traded in an active market. The Private Warrants were valued using a binomial lattice model. The primary unobservable input utilized in determining the fair value of the Private Warrants was the expected volatility of the Company’s Class A common stock. The expected volatility was based on consideration of the implied volatility from the Company’s own Public Warrant pricing and on the historical volatility observed at guideline public companies. As of March 31, 2024, the significant assumptions used in preparing the binomial lattice model for valuing the Private Warrants liability include (i) volatility of 89.9%, (ii) risk-free interest rate of 4.50%, (iii) strike price of $11.50, (iv) fair value of Class A common stock of $1.97, and (v) expected life of 2.2 years. As of December 31, 2023, the significant assumptions used in preparing the binomial lattice model for valuing the Private Warrants liability include (i) volatility of 92.1%, (ii) risk-free interest rate of 4.10%, (iii) strike price of $11.50, (iv) fair value of Class A common stock of $2.01, and (v) expected life of 2.4 years. There were no exercises or redemptions of the Public Warrants or Private Warrants during the three months ended March 31, 2024 or 2023.
The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy (in thousands):
  March 31, 2024 
  Level 1  Level 2  Level 3  Total 
Financial Assets:
            
Cash equivalents:
            
Money market funds 
$
45,470
  
$
-
  
$
-
  
$
45,470
 
Marketable securities:
                
U.S. Treasury securities  
151,524
   
-
   
-
   
151,524
 
Commercial paper  
-
   
30,744
   
-
   
30,744
 
Total assets at fair value on a recurring basis 
$
196,994
  
$
30,744
  
$
-
  
$
227,738
 
                 
Liabilities:
                
Public Warrants 
$
920
  
$
-
  
$
-
  
$
920
 
Private Warrants  
-
   
-
   
35
   
35
 
Total liabilities at fair value on a recurring basis 
$
920
  
$
-
  
$
35
  
$
955
 


  December 31, 2023 
  Level 1  Level 2  Level 3  Total 
Financial Assets:
            
Cash equivalents:
            
Money market funds 
$
50,226
  
$
-
  
$
-
  
$
50,226
 
U.S. Treasury securities  
59,654
   
-
   
-
   
59,654
 
Commercial paper  
-
   
19,436
   
-
   
19,436
 
Marketable securities:
                
U.S. Treasury securities  
82,640
   
-
   
-
   
82,640
 
Commercial paper  
-
   
41,236
   
-
   
41,236
 
Total assets at fair value on a recurring basis 
$
192,520
  
$
60,672
  
$
-
  
$
253,192
 
                 
Liabilities:
                
Public Warrants 
$
1,227
  
$
-
  
$
-
  
$
1,227
 
Private Warrants  
-
   
-
   
47
   
47
 
Total liabilities at fair value on a recurring basis 
$
1,227
  
$
-
  
$
47
  
$
1,274
 


Note 5. Inventory, Net



Inventory, net, consists of the following as of March 31, 2024 and December 31, 2023 (in thousands):



  March 31, 2024  December 31, 2023 
Raw materials $5,461  $4,951 
Work in progress  2,039   784 
Finished goods  1,470   1,592 
Total inventory  8,970   7,327 
Inventory reserves  (4,024)  (3,382)
Total inventory, net $4,946  $3,945 

As of March 31, 2024 and December 31, 2023, the Company included $4.0 million and $3.4 million, respectively, of reserves against inventory in the Condensed Consolidated Balance Sheets related to product that was considered to not have an alternative future use. For the three months ended March 31, 2024, the Company recorded $0.6 million reserve against inventory in Research and Development expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss related to product that was considered to not have an alternative future use.  There was no such reserve recorded against inventory for the three months ended March 31, 2023.


Note 6. Property and Equipment, Net
Property and equipment, net, consists of the following as of March 31, 2024 and December 31, 2023 (in thousands):

  
  March 31, 2024
  
December 31, 2023
 
Laboratory and production equipment
 
$
15,696
  
$
14,727
 
Computer equipment
  
1,721
   
1,707
 
Purchased software
  
188
   
188
 
Furniture and fixtures
  
325
   
310
 
Leasehold improvements  7,226   6,948 
Construction in process
  
2,133
   
2,438
 
Subtotal
  
27,289
   
26,318
 
Less: Accumulated depreciation and amortization
  
(11,120
)
  
(10,043
)
Property and equipment, net $16,169  $16,275 
Depreciation and amortization expense was $1.1 million and $0.8 million for the three months ended March 31, 2024 and 2023, respectively. The Company had no disposals of property and equipment for the three months ended March 31, 2024. Losses on disposals of property and equipment were immaterial for three months ended March 31, 2023. No impairments of property and equipment were recorded during the three months ended March 31, 2024 and 2023.

Note 7. Leases

Lease-related costs for the three months ended March 31, 2024 and 2023 are as follows (in thousands):

  2024
  2023
 
Operating lease cost $864  $982 
Variable lease cost  436   394 
Total lease cost $1,300  $1,376 

As of March 31, 2024, the maturities of the operating lease liabilities and a reconciliation to the present value of lease liabilities were as follows (in thousands):

  
Remaining
Lease Payments
 
Remainder of 2024 $3,339 
2025  4,527 
2026  4,585 
2027  4,549 
2028  2,975 
Thereafter  10,053 
Total remaining undiscounted lease payments $30,028 
Less: Imputed interest  (6,441)
Less: Lease incentives (1)
  (9,104)
Total operating lease liabilities 
14,483 
Less: current portion  (1,610)
Long-term operating lease liabilities $
12,873 
Weighted-average remaining lease term (in years)  6.2 
Weighted-average discount rate  7.9%

(1)
Includes lease incentives that may be realized in 2024 for the costs of leasehold improvements.

The following table provides certain cash flow and supplemental cash flow information related to the Company’s lease liabilities for the three months ended March 31, 2024 and 2023 (in thousands):

  2024
  2023
 
Operating cash paid to settle operating lease liabilities $1,097  $1,059 

In December 2021, the Company signed a 10-year lease for approximately 67,000 square feet of space in New Haven, Connecticut. The lease commenced on January 8, 2022 with rent payments beginning on July 7, 2022. Under the lease, the landlord agreed to reimburse the Company for up to $9.1 million in improvements to the space, to be used for such improvements as the Company deems “necessary or desirable”. On September 13, 2022, the Company filed a lawsuit against the landlord, alleging that the landlord has: (i) refused to reimburse the Company for costs related to improvements already incurred and submitted, (ii) delayed the Company’s completion of improvements, in order to avoid reimbursing the costs of those improvements, and (iii) improperly rejected the Company’s proposed improvement plans. The Company accounted for these lease incentives as an offset to the lease liability recorded at the inception of the lease. Although the Company believes it is contractually entitled to the $9.1 million of lease incentives, based on the current status of the litigation, the Company cannot determine the likely outcome or estimate the impact on such carrying values.

The Company incurred and recognized total leasehold improvements of approximately $1.6 million related to reimbursable construction costs which were included in construction in progress within Property and equipment, net, in the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

Note 8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following as of March 31, 2024 and December 31, 2023 (in thousands):

  
March 31, 2024
  
December 31, 2023
 
Restructuring costs $
222  $
519 
Legal fees
  
1,330
   
979
 
Royalties
  93   123 
Other  238   194 
Total accrued expenses and other current liabilities $1,883  $1,815 

Note 9. Stock-based Compensation 

Equity Incentive Plan

The Quantum-Si Incorporated 2021 Equity Incentive Plan (the “2021 Plan”) provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, are eligible for grants under the 2021 Plan. As of March 31, 2024 there were 14,661,839  shares available for future grant under the 2021 Plan.

Inducement Equity Incentives

On May 8, 2023, the Company adopted the 2023 Inducement Equity Incentive Plan (the “2023 Inducement Plan”) to reserve 3,000,000 shares of its Class A common stock to be used exclusively for grants of awards to employees that were not previously employees or directors of the Company as a material inducement to such individuals’ entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms and conditions of the 2023 Inducement Plan are substantially similar to those of the 2021 Plan. As of March 31, 2024, there were 60,250 shares remaining available for issuance under the 2023 Inducement Plan.
Stock Options
During the three months ended March 31, 2024, the Company did not grant any stock options to participants. Stock-based compensation related to stock options for the three months ended March 31, 2024 and 2023 was $1.3 million and $2.3 million, respectively.

A summary of the stock option activity is presented in the table below:

  
Number of
Options
  
Weighted Average
Exercise Price
(per share)
  
Weighted Average
Remaining
Contractual Life
(in years)
  
Aggregate
Intrinsic Value
(in thousands)
 
Outstanding at December 31, 2023
  
22,511,900
  
$
2.79
   
8.22
  
$
3,194
 
Granted
  
-
   
-
         
Exercised
  
-
  
-
         
Forfeited
  
(384,573
)
  
3.78
         
Expired
  (25,520)  0.06         
Outstanding at March 31, 2024
  
22,101,807
  
$
2.78
   
8.01
  
$
2,832
 
Exercisable at March 31, 2024
  
7,918,930
  
$
3.52
   
6.65
  
$
610
 
Vested and expected to vest at March 31, 2024
  
18,615,698
  
$
2.85
   
7.86
  
$
2,286
 
Modification of Performance Stock Options

In November 2022 and May 2023, the Company granted 2,780,000 and 1,000,000 performance-based stock option awards to its Chief Executive Officer and Chief Financial Officer, respectively. The vesting of these awards are subject to continued service to the Company and certain market conditions. The market conditions require the Company’s Class A common stock trade above specified levels for a certain periods of time. The fair values of the awards were estimated at the grant date using the Monte Carlo simulation model.

On March 15, 2024, the market conditions that trigger the vesting of these performance-based stock option awards were modified. The modified market conditions require the Company’s Class A common stock to trade above specified levels for certain defined periods of time that are different from the original awards. The Company accounted for the modifications as modifications of market conditions. The total incremental stock-based compensation expense to be recognized for these awards is $2.4 million within Selling, general and administrative operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Incremental stock-based compensation expense for the three months ended March 31, 2024 was immaterial. There were no such modifications to performance-based stock option awards for the three months ended March 31, 2023.

Restricted Stock Units
During the three months ended March 31, 2024, the Company granted 5,406,164 restricted stock unit (“RSU”) awards. Stock-based compensation related to RSU awards for the three months ended March 31, 2024 and 2023 was $0.3 million and $1.6 million, respectively.

A summary of the RSU activity is presented in the table below:

  
Number of Shares
Underlying RSUs
  
Weighted Average
Grant-Date Fair
Value (per share)
 
Nonvested RSUs at December 31, 2023
  
847,169
  $2.68 
Granted  
5,406,164
   
1.73
 
Vested  
(46,572
)
  
6.66
 
Forfeited  
(54,417
)
  
2.11
 
Nonvested RSUs at March 31, 2024
  
6,152,344
  

1.82
 
Stock-based compensation is allocated to Research and development and Selling, general and administrative operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Stock-based compensation expense for the three months ended March 31, 2024 and 2023 is as follows (in thousands):

  2024
  2023
 
Research and development
 
$
490
  
$
967
 
Selling, general and administrative
  
1,155
   
2,941
Total stock-based compensation
 $1,645  $3,908

As of March 31, 2024 total unrecognized stock-based compensation related to stock options and RSUs was $24.4 million, which is expected to be recognized over the remaining weighted average vesting period of 3.3 years.

Note 10. Net Loss Per Share

The Company presents both basic earnings per share (“EPS”) and diluted EPS. Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by giving effect to all common share equivalents to the extent they are dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all common share equivalents would have been anti-dilutive.
The following table presents the calculations for the three months ended March 31, 2024 and 2023 of basic and diluted net loss per share for the Company’s common stock (in thousands, except per share amounts):
  2024
  2023
 
Numerator      
Net loss 
$
(19,474
)
 
$
(23,611
)
Numerator for basic and diluted EPS - loss attributable to common stockholders $(19,474) $(23,611)
Denominator        
Common stock  
141,773
   
140,280
 
Denominator for basic and diluted EPS - weighted-average common stock  141,773   140,280 
Basic and diluted net loss per share $(0.14) $(0.17)

Additionally, net loss per share attributable to Class A and Class B common stockholders was the same on a basic and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive.

The following potential dilutive shares were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive for the three months ended March 31, 2024 and 2023:

  2024
  2023
 
Outstanding options to purchase common stock
  
22,101,807
   
24,218,892
 
Outstanding restricted stock units
  
6,152,344
   
465,866
 
Outstanding warrants
  
3,968,319
   
3,968,319
 
   32,222,470   28,653,077 

Note 11. Warrant Liabilities

Public Warrants
As of March 31, 2024 and December 31, 2023, there were an aggregate of 3,833,319 Public Warrants outstanding, which entitle the holder to acquire Class A common stock. Each whole Public Warrantwarrant entitles the registered holder to purchase one share of Class A common stock at aan exercise price of $11.50 per share, subject to adjustment (see Note 7).

NOTE 4. PRIVATE PLACEMENT

Simultaneously withas discussed below, beginning on September 9, 2021. The warrants will expire on June 10, 2026 or earlier upon redemption or liquidation.

Redemptions

At any time while the closingPublic Warrants are exercisable, the Company may redeem not less than all of the Initialoutstanding Public Offering,Warrants:


in whole and not in part;


at a price of $0.01 per warrant;


upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and


if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders.

If the Sponsor purchased an aggregateforegoing conditions are satisfied and the Company issues a notice of 405,000 Private Placement Unitsredemption of the Public Warrants at $0.01 per warrant, each holder of Public Warrants will be entitled to exercise their Public Warrants prior to the scheduled redemption date.
If the Company calls the Public Warrants for redemption for $0.01 as described above, the Board may elect to require any holder that wishes to exercise their Public Warrants to do so on a “cashless basis.” If the Board makes such election, all holders of Public Warrants would pay the exercise price by surrendering their warrants for the number of $10.00 per Private Placement Unit, for an aggregate purchase price of $4,050,000. Each Private Placement Unit consists of one shareshares of Class A common stock (“Private Placement Share” or, collectively, “Private Placement Shares”) and one-thirdequal to the quotient obtained by dividing (x) the product of one warrant (each, a “Private Placement Warrant”). Each whole Private Placement Warrant is exercisable to purchase one sharethe number of shares of Class A common stock at aunderlying the warrants, multiplied by the excess of the “fair market value” over the exercise price of $11.50 per share, subject to adjustment. A portionthe warrants by (y) the “fair market value”. For purposes of the proceeds from the Private Placement Units were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the saleredemption provisions of the Private Placement Units will be used to fundwarrants, the redemption of“fair market value” means the Public Shares (subject to the requirements of applicable law), and the Private Placement Units and all underlying securities will expire worthless.

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

On June 10, 2020, the Company issued an aggregate of 2,875,000 shares of Class B common stock to the Sponsor (the “Founder Shares”) for an aggregate price of $25,000. On June 30, 2020, the Sponsor transferred 30,000 Founder Shares to each of its three independent directors, or an aggregate of 90,000 Founder Shares, resulting in the Sponsor holding an aggregate of 2,785,000 Founder Shares. The Founder Shares included an aggregate of up to 375,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the number of Founder Shares would equal 20% of the Company’s issued and outstanding shares after the Initial Public Offering (not including the Private Placement Shares). As a result of the underwriters’ election to fully exercise their over-allotment option, 375,000 Founder Shares are no longer subject to forfeiture.

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if theaverage last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 2010 trading days within any 30-tradingending on the third trading day period commencing at least 150 days after a Business Combination, or (y)prior to the date on which the notice of redemption is sent to the holders of warrants.

The Public Warrants do not meet the criteria to be classified in stockholders’ equity as the exercise of the Public Warrants may be settled in cash upon the occurrence of a tender offer or exchange offer in which the maker of the tender offer or exchange offer, upon completion of the tender offer or exchange offer, beneficially owns more than 50% of the outstanding shares of the Company’s Class A common stock, even if it would not result in a change of control of the Company. This provision precludes the Public Warrants from being classified in equity and thus they are classified as long-term liabilities in the Condensed Consolidated Balance Sheets.
Private Warrants
As of March 31, 2024 and December 31, 2023, there were 135,000 Private Warrants outstanding. The Private Warrants are identical to the Public Warrants, except that so long as they are held by HighCape Capital Acquisition LLC or any of its permitted transferees, (i) the Private Warrants and the shares of Class A common stock issuable upon the exercise of the Private Warrants were not transferable, assignable or saleable until 30 days after the completion of the Business Combination, (ii) the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and (iii) the Private Warrants are not subject to the Company’s redemption option at the price of $0.01 per warrant. The Private Warrants are subject to the Company’s redemption option at the price of $0.01 per warrant, provided the other conditions of such redemption are met, as described above. If the Private Warrants are held by a holder other than HighCape Capital Acquisition LLC or any of its permitted transferees, the Private Warrants will be redeemable by the Company completesin all redemption scenarios applicable to the Public Warrants and exercisable by such holders on the same basis as the Public Warrants.
The Private Warrants do not meet the criteria to be classified in stockholders’ equity as the terms of the warrants provide for potential changes to the settlement amounts depending upon the characteristics of the warrant holder, and, because the holder of a liquidation, merger, capital stock exchangewarrant is not an input into the pricing of a fixed-for-fixed option on equity shares. This provision precludes the Private Warrants from being classified in equity and thus they are classified as long-term liabilities in the Condensed Consolidated Balance Sheets.

The fair value of warrant liabilities was $1.0 million and $1.3 million as of March 31, 2024 and December 31, 2023, respectively. The Company recognized gains of $0.3 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively, as a Change in fair value of warrant liabilities in the Condensed Consolidated Statements of Operations and Comprehensive Loss. There were no exercises or redemptions of the Public Warrants or Private Warrants during the three months ended March 31, 2024 or 2023.


Note 12. Restructuring



The Company committed to organizational restructurings during the first and third quarters of 2023, designed to decrease its costs and create a more streamlined organization to support its business. As of March 31, 2024 and December 31, 2023, the Company recorded a restructuring liability of $0.2 million and $0.5 million, respectively, which is included in Accrued expenses and other similar transactioncurrent liabilities in the Condensed Consolidated Balance Sheets.


The Company’s restructuring costs, primarily for cash severance and other severance costs, are allocated to the following operating expense categories as follows (in thousands):

  
Research and
Development
  
Selling,
general and
administrative
  Total 
Balance as of December 31, 2023 $513  $6  $519 
Restructuring charges incurred(1)
  131   -   131 
Cash payments and other adjustments(1)
  (422)  (6)  (428)
Balance as of March 31, 2024
 $222  $-  $222 
Current liabilities         $222 
Long-term liabilities          - 
Total liabilities as of March 31, 2024         $222 

(1)Restructuring charges incurred and Cash payments and other adjustments include non-cash charges related to stock-based compensation expenses.

The Company’s restructuring activities are complete as of March 31, 2024 and the Company does not expect to incur material additional charges associated with these activities.

Note 13. Income Taxes
Income taxes for the three months ended March 31, 2024 and 2023 are recorded at the Company’s estimated annual effective income tax rate, subject to adjustments for discrete events, if they occur. The Company’s estimated annual effective tax rate was 0.0% for the three months ended March 31, 2024 and 2023. The primary reconciling items between the federal statutory rate of 21.0% for these periods and the Company’s overall effective tax rate of 0.0% were related to the effects of deferred state income taxes, stock-based compensation, changes in the fair value of warrant liabilities, research and development credits, and the valuation allowance recorded against the full amount of its net deferred tax assets.

A valuation allowance is required when it is more likely than not that results insome portion or all of the Public Stockholders havingCompany’s deferred tax assets will not be realized. The realization of deferred tax assets depends on the right to exchange their sharesgeneration of common stock for cash, securities or other property.


HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Promissory Note — Related Party

On June 10, 2020,sufficient future taxable income during the Sponsor issued an unsecured promissory note toperiod in which the Company’s related temporary differences become deductible. Management believes that based on the earnings history of the Company, (the “Promissory Note”it is more likely than not that the benefits of these assets will not be realized, and therefore, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of March 31, 2024 and December 31, 2023.


Note 14. Related Party Transactions
Effective as of February 17, 2021, legacy Quantum-Si entered into a Master Services Agreement (“MSA”) with 4Catalyzer Corporation (“4C”), a company controlled by Dr. Jonathan Rothberg, the Chairman of the Board, pursuant to which the Company could borrow upmay engage 4C to an aggregate principal amountprovide services such as general administration, facilities, information technology, financing, legal, human resources and other services, through future statements of $300,000, of which $99,627 was outstandingwork and under terms and conditions to be determined by the Promissory Note as of September 9, 2020. The Promissory Note was non-interest bearing and payable on the earlier of June 10, 2021 or the consummation of the Initial Public Offering. The Promissory Note was repaid in full on September 15, 2020.

Related Party Loans

In addition, in order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into units upon consummation of the Business Combination at a price of $10.00 per unit. The units would be identical to the Private Placement Units. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements existparties with respect to such loans.any services to be provided. For the three months ended March 31, 2024 and 2023, the Company incurred $0.1 million of expenses payable to 4C. These expenses included amounts for month-to-month sublease arrangements for office and laboratory spaces from 4C and certain administrative expenses. These amounts are included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.


Effective October 1, 2022, the Company entered into a Protein Engineering Collaboration (the “New Collaboration”) with Protein Evolution, Inc. (“PEI”) to develop technology and methods in the field of nanobodies and potentially other binders to produce novel biological reagents and related data. Dr. Rothberg serves as Chairman of the board of directors of PEI and the Rothberg family are controlling stockholders of PEI. As of September 30, 2020, there were no amounts outstanding underMarch 31, 2024, the Working Capital Loans.

Administrative Support Agreement

Theamount due from PEI to the Company related to the New Collaboration was $0.2 million. As of December 31, 2023, the amount due from PEI to the Company related to the New Collaboration was $0.3 million.


Effective November 1, 2022, the Company entered into an agreement, commencing on September 3, 2020,Advisory Agreement with Dr. Rothberg (the “Advisory Agreement”), pursuant to pay an affiliatewhich Dr. Rothberg serves as Chairman of the Sponsor a total of upBoard, advises the Chief Executive Officer and the Board on strategic matters, and provides consulting, business development and similar services on matters relating to $10,000 per monththe Company’s current, future and potential scientific and strategic initiatives and such other consulting services reasonably requested from time to time. Pursuant to the Advisory Agreement, as compensation for office space, secretarial and administrative support. Upon completion of a Business Combination or its liquidation,the services provided thereunder, in March 2023, the Company will cease paying these monthly fees. The Company incurred $25,000 fees for these services forgranted Dr. Rothberg an option to purchase 250,000 shares of Class A common stock pursuant to the three months ended September 30, 2020 and for2021 Plan. In connection with the periodAdvisory Agreement, Dr. Rothberg’s title was changed from June 10, 2020 (inception) through September 30, 2020,Executive Chairman to Chairman of which $25,000 is included in accounts payable and accrued expenses in the accompanying condensed balance sheet at September 30, 2020.

Board.


NOTE 6. COMMITMENTS AND CONTINGENCIES

Risks

Note 15. Commitments and Uncertainties

Management continuesContingencies

Commitments
Licenses related to evaluatecertain intellectual property:
The Company licenses certain intellectual property, some of which may be utilized in its current or future product offerings. To preserve the impactright to use such intellectual property, the Company is required to make annual minimum fixed payments totaling approximately $0.1 million as well as royalties based on net sales if the royalties exceed annual minimum fixed payments. As of March 31, 2024 and December 31, 2023, the COVID-19 pandemic onCompany had accrued royalties of approximately $0.1 million included in Accrued expenses and other current liabilities in the industryCondensed Consolidated Balance Sheets.
Other commitments:
The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees (the “401(k) Plan”). Contributions to the 401(k) Plan are discretionary. The Company did not make any matching contributions to the 401(k) Plan for the three months ended March 31, 2024 and has concluded that while it2023.

Contingencies
The Company is reasonably possible thatsubject to claims in the virus could have a negative effect onordinary course of business. Except as discussed below, the Company’s financial position and/or search for a target company, the specific impactCompany is not readily determinable as of the date of the financial statements. The financial statements do not includecurrently a party to any adjustments that might result frompending or threatened litigation, the outcome of this uncertainty.

Registration Rights

Pursuantwhich would be expected to have a material adverse effect on its financial condition, results of operations, or cash flows. The Company accrues contingent liabilities to the extent the liability is probable and estimable.


In April 2023, the Company informed the contract manufacturer that had manufactured its Platinum® and Carbon™ instruments that it intended to wind down the relationship and transition to a registration rights agreement entereddifferent contract manufacturer. In October 2023, the former contract manufacturer filed a complaint against the Company in the State of Texas alleging breach of contract and made claims for economic damage and attorney costs. In January 2024, the suit was withdrawn and refiled in the State of Minnesota alleging similar claims. Although it is not possible to determine the potential financial exposure associated with the alleged claim at this time given its early stage, the Company believes it has a meritorious defense and intends to vigorously defend against all claims asserted in the complaint.
The Company enters into on September 3, 2020,agreements that contain indemnification provisions with other parties in the holdersordinary course of business, including business partners, investors, contractors, and the Company’s officers, directors and certain employees. The Company has agreed to indemnify and defend the indemnified party claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claims because of the Founder Shares, Private Placement Units, Private Placement Shares, Private Placement WarrantsCompany’s activities or non-compliance with certain representations and securities that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable uponwarranties made by the exercise ofCompany. It is not possible to determine the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights, requiring the Company to register such securities and any other securities of the Company acquired by them priormaximum potential loss under these indemnification provisions due to the consummationCompany’s limited history of a Business Combination for resale. The holdersprior indemnification claims and the unique facts and circumstances involved in any particular case. To date, losses recorded in the Condensed Consolidated Statements of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurredOperations and Comprehensive Loss in connection with the filingindemnification provisions have not been material.


HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

NOTE 7. STOCKHOLDERS’ EQUITY

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2020, there were no shares of preferred stock issued or outstanding.

Class A Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2020, there were 1,182,364 shares of Class A common stock issued and outstanding, excluding 10,722,636 Class A common stock subject to possible redemption.

Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At September 30, 2020, there were 2,875,000 shares of Class B common stock issued and outstanding.

Only holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our shareholders except as otherwise required by law.

The shares of Class B common stock will automatically convert into Class A common stock immediately following the completion of the Business Combination, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in connection with a Business Combination the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders and excluding the Private Placement Shares underlying the Private Placement Warrants), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any Private Placement Units issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.

Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a current prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless the shares of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Class A common stock are, at the time of any exercise of a Public Warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, the shares under applicable blue sky laws to the extent an exemption is not available.


HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Once the warrants become exercisable, the Company may redeem the Public Warrants:

in whole and not in part;
at a price of $0.01 per warrant;
upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
if, and only if, the closing price of the Company’s common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders.

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that (1) the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (2) the Private Placement Warrants will be exercisable on a cashless basis, (3) the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees, and (4) the holders of the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will have certain registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

NOTE 8. FAIR VALUE MEASUREMENTS

 At September 30, 2020, assets held in the Trust Account were comprised of $115,000,384 in money market funds, which are invested in U.S. Treasury Securities. During the period from June 10, 2020 (inception) through September 30, 2020, the Company did not withdraw any interest income from the Trust Account.

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.


HIGHCAPE CAPITAL ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description Level  

September 30,

2020

 
Assets:        
Cash and cash equivalents held in Trust Account – U.S. Treasury Securities Money Market Fund  1  $115,000,384 

NOTE 9. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued, November 12, 2020. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to HighCape Capital Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to HighCape Capital Acquisition, LLC.
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations


The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with (i) the unaudited Condensed Consolidated Financial Statements and notes thereto contained in this Quarterly Report on Form 10-Q, (ii) the Consolidated Financial Statements and notes thereto for the year ended December 31, 2023 contained in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 29, 2024 and (iii) our other public reports filed with the SEC. This discussion contains forward looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, the “Company” or “Quantum-Si” are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries. The unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2024 and 2023 present the financial position and results of operations of Quantum-Si Incorporated and its consolidated subsidiaries.

Overview

We are an innovative life sciences company with the mission of transforming single-molecule analysis and democratizing its use by providing researchers and clinicians access to the proteome, the set of proteins expressed within a cell. We have developed a proprietary universal single-molecule detection platform that we are first applying to proteomics to enable NGPS, the ability to sequence proteins in a massively parallel fashion (rather than sequentially, one at a time), that can be used for the study of nucleic acids. Our platform was designed to offer an end-to-end workflow including both sample preparation and sequencing and is comprised of our Platinum® NGPS instrument, the Platinum Analysis Software service, and reagent kits and proprietary semiconductor chips for use with our Platinum® instrument. We began a controlled launch of the Company’sPlatinum® instrument in December 2022 and subsequently initiated a full commercial launch at the end of the first quarter of 2024.

Now that our Platinum® and Platinum Analysis Software system has launched, we intend to follow a systematic, phased approach to continue to successfully launch updates to our platform. We believe we are the first company to successfully enable NGPS on a semiconductor chip, thus digitizing a massive proteomics opportunity, which allows for a massively parallel solution at the ultimate level of sensitivity -single-molecule detection. We believe our platform, which is designed to streamline sequencing and data analysis at a lower instrument cost than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome. For example, we believe our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, vaccine development, quality assurance and quality control, among other applications.

Results of Operations for the Three Months Ended March 31, 2024 as Compared to the Three Months Ended March 31, 2023

The following table presents the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023 (dollars in thousands):

  Three months ended March 31, 
  2024  2023  $ Change  % Change 
Revenue:            
Product $428  $251  $177   70.5%
Service  29   3   26   866.7%
Total revenue  457   254   203   79.9%
                 
Cost of revenue  188   130   58   44.6%
                 
Gross profit  269   124   145   116.9%
Operating expenses:                
Research and development  12,101   18,167   (6,066)  (33.4)%
Selling, general and administrative  11,528   11,178   350   3.1%
Total operating expenses  23,629   29,345   (5,716)  (19.5)%
Loss from operations  (23,360)  (29,221)  5,861   (20.1)%
Dividend and interest income  3,574   2,219   1,355   61.1%
Gain on marketable securities, net  -   2,942   (2,942)  (100.0)%
Change in fair value of warrant liabilities  319   391   (72)  (18.4)%
Other (expense) income, net  (7)  58   (65)  (112.1)%
Loss before provision for income taxes  (19,474)  (23,611)  4,137   (17.5)%
Provision for income taxes  -   -   -  nm 
Net loss $(19,474) $(23,611) $4,137   (17.5)%

Revenue, Cost of Revenue and Gross Profit

Revenue is derived from sales of products and services. Product revenue is generated from the following sources: (i) sales of our Platinum® instrument, (ii) consumables, which consist of sales of our library, sequencing reagents and semiconductor chips, and (iii) freight revenue, which is recognized upon shipment. Service revenue is generated from service maintenance contracts including Platinum Analysis Software access, and advanced training for instrument use.

Cost of revenue primarily consists of product and service costs including material costs, personnel costs and benefits, inbound and outbound freight, packaging, warranty replacement costs, royalty costs, facilities costs, depreciation and amortization expense, and inventory excess and obsolescence reserves.

Revenue, Cost of revenue and Gross profit for the three months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

  2024  2023  $ Change  % Change 
Total revenue $457  $254  $203   79.9%
Cost of revenue  188   130   58   44.6%
Gross profit $269  $124  $145   116.9%
Gross profit margin  58.9%  48.8%        

Total revenue for the three months ended March 31, 2024 increased $0.2 million, or 79.9%, for the sale of Platinum® instruments, related reagent kits and service maintenance contracts as compared to the same period in 2023. Cost of revenue recognized for the three months ended March 31, 2024 increased $0.1 million, or 44.6%, as compared to the same period in 2023. Gross profit increased $0.1 million, or 116.9%, for the three months ended March 31, 2024. We began a controlled launch of the Platinum® instrument and started to take orders in December 2022. We subsequently began limited commercial shipments of Platinum® in January 2023 and subsequently initiated a full commercial launch at the end of the first quarter of 2024.

Research and Development Expenses

Research and development expenses primarily consist of personnel costs and benefits, stock-based compensation, lab supplies, consulting and professional services, fabrication services, charges related to product without an alternative future use, facilities costs, software, and other outsourced expenses. Research and development expenses are recognized as incurred. Our research and development expenses are primarily related to developing new products and services.

Research and development expenses for the three months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

  2024  2023  $ Change  % Change 
Research and development $12,101  $18,167  $(6,066)  (33.4)%

Research and development expenses decreased by $6.1 million, or 33.4%, for the three months ended March 31, 2024 compared to the same period in 2023. This decrease was primarily due to a $4.0 million decrease in fabrication and outsourced services and a $1.7 million decrease in payroll and payroll-related costs, primarily driven by restructuring activities that occurred in 2023 and personnel costs that were capitalized for the three months ended March 31, 2024.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of personnel costs and benefits, stock-based compensation, patent and filing fees, consulting and professional services, legal and accounting services, facilities costs, depreciation and amortization expense, insurance and office expenses, product advertising and marketing.

Selling, general and administrative expenses for the three months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

  2024  2023  $ Change  % Change 
Selling, general and administrative $11,528  $11,178  $350   3.1%

Selling, general and administrative expenses increased $0.4 million, or 3.1%, for the three months ended March 31, 2024 as compared to the same period in 2023. This was primarily due to a $0.9 million increase in legal fees and a $0.4 million increase in marketing expenses incurred as part of our increased commercialization efforts, partially offset by $0.9 million net decrease in personnel costs and a $0.4 million decrease in insurance costs.

Dividend and Interest Income

In 2024, dividend and interest income is derived primarily from fixed income securities and money market funds. In 2023, dividend and interest income was derived from mutual funds.

Dividend and interest income for the three months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

  2024  2023  $ Change  % Change 
Dividend and interest income $3,574  $2,219  $1,355   61.1%

Dividend and interest income increased by $1.4 million, or 61.1%, for the three months ended March 31, 2024 as compared to the same period in 2023. The increase was a result of higher dividends and interest earned on invested balances in marketable securities.

Gain on Marketable Securities, Net

Gain on marketable securities, net, for the three months ended March 31, 2024 and 2023 is as follows (dollars in thousands):

  2024  2023  $ Change  % Change 
Gain on marketable securities, net $-  $2,942  $(2,942)  (100.0)%

There was no Gain on marketable securities, net, for the three months ended March 31, 2024 as compared to a gain of $2.9 million for the same period in 2023. The prior year gains were primarily related to market adjustments of investments in marketable securities, which consisted of fixed income mutual funds.

Change in Fair Value of Warrant Liabilities

The warrant liabilities were recorded at fair value as part of the business combination between HighCape Capital Acquisition LLC and Quantum-Si Incorporated in June 2021 (the “Business Combination”). Change in fair value of warrant liabilities primarily consists of the change in the fair value of our Public Warrants and Private Warrants.

Change in warrant liabilities for the three months ended March 31, 2024 and 2023 is as follows (dollars in thousands):

  2024  2023  $ Change  % Change 
Change in fair value of warrant liabilities $319  $391  $(72)  (18.4)%

The fair value of warrant liabilities decreased $0.1 million, or 18.4%, for the three months ended March 31, 2024 as compared to the same period in 2023. This decrease was primarily driven by the decrease in the underlying trading price of our Class A common stock experienced during the three months ended March 31, 2024.

Other (Expense) Income, Net

Other (expense) income, net, for the three months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

  2024  2023  $ Change  % Change 
Other (expense) income, net $(7) $58  $(65)  (112.1)%

Other (expense) income, net decreased by $0.1 million, or 112.1%, for the three months ended March 31, 2024 as compared to the same period for 2023.

Liquidity and Capital Resources

The following table presents a summary of our consolidated cash flows for operating, investing, and financing activities for the three months ended March 31, 2024 and 2023, (in thousands):

  Three months ended March 31, 
  2024  2023 
Net cash (used in) provided by:      
Net cash used in operating activities $(23,208) $(28,698)
Net cash (used in) provided by investing activities  (57,428)  26,039 
Net cash used in financing activities  (56)  - 
Effect of exchange rate changes on cash and cash equivalents  (5)  - 
Net change in cash and cash equivalents $(80,697) $(2,659)

Net cash used in operating activities

The net cash used in operating activities during the three months ended March 31, 2024, was $23.2 million compared to $28.7 million for the same period in 2023. This $5.5 million decrease was primarily driven by our operating results which resulted in a $3.1 million decrease in net cash used year-over-year as well as a decrease of $2.4 million in net cash used resulting from changes in operating assets and liabilities. Timing of cash receipts and cash payments in the ordinary course of business caused operating cash flow to fluctuate from period to period.

Net cash (used in) provided by investing activities

During the three months ended March 31, 2024, net cash used in investing activities was $57.4 million compared to net cash provided by investing activities of $26.0 million for the same period in 2023. This change was due primarily due to an increase in purchases of marketable securities of $78.8 million as well as a $7.0 million decrease in proceeds from the sales of marketable securities.

Net cash used in financing activities

During the three months ended March 31, 2024, net cash used in financing activities was $0.1 million. The net cash used primarily consisted of deferred offering costs paid for the Shelf Registration Statement and the ATM Offering, both of which are defined and described below. There were no financing activities during the three months ended March 31, 2023.

Liquidity Outlook

Since our inception, we have funded our operations primarily with proceeds from the issuance of equity to private investors, as well as with the proceeds received from the closing of the Business Combination on June 10, 2021. Additionally, we began to generate revenue during 2023 from commercial sales of our Platinum® instrument. Our primary uses of liquidity have been operating expenses, capital expenditures and our acquisition of certain assets. Cash flows from operations have been historically negative as we continue to invest in the development of our technology in NGPS. Going forward, we anticipate debt or equity offerings will be the primary source of funds to support our operating needs and capital expenditures until we reach scale of our commercial operations. We expect to incur negative operating cash flows on an annual basis for the foreseeable future until such time that we can scale our revenue growth.

We expect that our existing cash and cash equivalents and investments in marketable securities, together with revenue from the sale of our products and services, will be sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements and fund our operations for at least the next 12 months. We expect to use our cash and cash equivalents and investments in marketable securities and funds from revenue generated to invest in our continued commercialization efforts, to further invest in research and development, for other operating expenses, business acquisitions and for working capital and general corporate purposes.

As of March 31, 2024, we had cash and cash equivalents and investments in marketable securities totaling $235.4 million. Our future capital requirements may vary from those currently planned and will depend on various factors including the pace and success of product commercialization.

Our ongoing commercialization of Platinum® as well as our continuing research and development efforts to enhance our Platinum® instrument may require an accelerated amount of spending to enhance the sales and marketing teams, continue to drive development, and build inventory. Other factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones, (ii) unforeseen capital expenditures and fabrication costs related to manufacturing for commercialization, (iii) changes we may make in our business or commercialization strategy, (iv) costs of running a public company, (v) other items affecting our forecasted level of expenditures and use of cash resources, including potential acquisitions, and (vi) increased product and service costs.

In August 2023, we filed a $150 million Shelf Registration Statement (the “Shelf Registration Statement”), which became effective on August 22, 2023.

In August 2023, we also entered into an Equity Distribution Agreement (“EDA”) with an outside placement agent (the “Agent”), under which we may, from time to time, sell shares of our Class A common stock under the ATM Offering. The Shelf Registration Statement includes a prospectus supplement covering the offering, issuance and sale of up to $75 million of our Class A common stock, from time to time, in at-the-market offerings through the Agent (the “ATM Offering”). The shares to be sold under the EDA may be issued and sold pursuant to the Shelf Registration Statement. The EDA also provides that the Agent will be entitled to compensation for its services in an amount up to 3.0% of the gross proceeds from the sales of shares sold through the Agent under the EDA. We have no obligation to sell any shares under the EDA and may at any time suspend solicitation and offers under the EDA. To date, we have not issued or sold any shares of our Class A common stock under the ATM Offering.

In the future, we may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition, operating results and cash flows.

Contractual Obligations

We lease certain facilities and equipment under non-cancellable lease agreements that expire at various dates through 2032. As of March 31, 2024, the future payments, before adjustments for tenant incentives, under leases was approximately $30.0 million.

Licenses related to certain intellectual property

We license certain intellectual property, some of which may be utilized in our current or future product offerings. To preserve the right to use such intellectual property, we are required to make annual minimum fixed payments totaling approximately $0.1 million as well as royalties based on net sales if the royalties exceed annual minimum fixed payments.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs,is based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a blank check company incorporated on June 10, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock businesses. We intend to effectuate our initial Business Combination using cash from the proceeds of our Initial Public Offering and the private placement of the Private Placement Units, the proceeds of the sale of our shares in connection with our initial Business Combination, shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.

We expect to continue to incur significant costs in the pursuit of our initial Business Combination. We cannot assure you that our plans to complete our initial Business Combination will be successful.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through September 30, 2020 were organizational activities, those necessary to prepare for our Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for an initial Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2020, we had a net loss of $50,253,unaudited Condensed Consolidated Financial Statements, which consists of formation and operating costs of $50,637, offset by interest income on marketable securities held in the Trust Account of $384.

For the period from June 10, 2020 (inception) through September 30, 2020, we had a net loss of $51,253, which consists of formation and operating costs of $51,637, offset by interest income on marketable securities held in the Trust Account of $384.

Liquidity and Capital Resources

Until the consummation of the Initial Public Offering, the Company’s only source of liquidity was an initial purchase of Class B ordinary shares by our Sponsor and loans from our Sponsor.

On September 9, 2020, we consummated our Initial Public Offering of 11,500,000 Units, inclusive of the full exercise by the underwriters of their over-allotment option in the amount of 1,500,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $115,000,000. Simultaneously with the closing of our Initial Public Offering, we consummated the sale of 405,000 Private Placement Units to the Sponsor at a price of $10.00 per Unit, generating gross proceeds of $4,050,000.


Following our Initial Public Offering, the full exercise of the over-allotment option and the sale of the Private Placement Units, a total of $115,000,000 was placed in the Trust Account. We incurred $6,797,377 in transaction costs, including $2,300,000 of underwriting fees, $4,025,000 of deferred underwriting fees and $472,377 of other costs.

For the period from June 10, 2020 (inception) through September 30, 2020, cash used in operating activities was $182,900. Net loss of $51,253 was affected by interest earned on marketable securities held in the Trust Account of $384 and changes in operating assets and liabilities, which used $131,263 of cash from operating activities.

As of September 30, 2020, we had cash and marketable securities of $115,000,384 held in the Trust Account. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes paid and deferred underwriting commissions) to complete our initial Business Combination. We may withdraw interest to pay taxes. During the period ended September 30, 2020, we did not withdraw any interest earned on the Trust Account. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

As of September 30, 2020, we had cash of $1,164,723 outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete our initial Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with our initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial Business Combination, we would repay such loaned amounts. In the event that our initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units identical to the Private Placement Units, at a price of $10.00 per unit at the option of the lender.

We do not currently believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating our initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee up to $10,000 for office space, secretarial and administrative support services. We began incurring these fees on September 3, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.

The underwriters are entitled to a deferred fee of $4,025,000prepared in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.


Critical Accounting Policies

The preparation of unaudited condensed financial statements and related disclosures in conformityaccordance with accounting principles generally accepted in the United States of AmericaAmerica. The preparation of these unaudited Condensed Consolidated Financial Statements requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and income andunaudited Condensed Consolidated Financial Statements, as well as expenses incurred during the periods reported.reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results could materiallymay differ from those estimates. We have identified the followingthese estimates under different assumptions or conditions. Please refer to our critical accounting policies:

Class A Common Stock Subjectpolicies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 and Note 2. Summary of Significant Accounting Policies, in the accompanying notes to Possible Redemption

We accountthe unaudited Condensed Consolidated Financial Statements for our Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outsidecomplete description of our control and subjectsignificant accounting policies.


Recently Issued Accounting Pronouncements

Please refer to occurrenceNote 2. Summary of uncertain future events. Accordingly,Significant Accounting Policies, in the Class A common stock subjectaccompanying notes to possible redemption is presented as temporary equity, outsidethe unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a description of the stockholders’ equity section of our unaudited condensed balance sheet.

Net Loss per Common Share

We apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable taxes, by the weighted average number of shares of Class A redeemable common stock outstanding for the periods. Net income per common share, basic and diluted for and Class B non-redeemable common stock is calculated by dividing net income less income attributable to Class A redeemable common stock, by the weighted average number of shares of Class B non-redeemable common stock outstanding for the periods presented.

Recent Accounting Standards

Management does not believe that any recently issued but not yet effective, accounting standards, if currently adopted, would have a material effect onpronouncements that may potentially impact our unaudited condensed financial statements.

position and results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 3.Quantitative and Qualitative Disclosures About Market Risk


Inflation risk

We believe inflation can and has had an impact on the underlying cost of our supplies and manufacturing components related to our business. To the extent our costs are impacted by general inflationary pressures, we may not be able to fully offset such higher costs through price increases or manufacturing efficiencies. Our inability or failure to do so could harm our business, financial condition, results of operations or cash flows.

Interest rate risk

As of September 30, 2020, we were not subject to any market or interest rate risk. Following the consummationMarch 31, 2024, our marketable securities are comprised primarily of our Initial Public Offering, the net proceeds received into the Trust Account, have been investedinvestments in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in US treasuries. Duebacked by U.S. government issued securities, U.S. Treasury bills, and high-quality corporate commercial paper. The primary objective of our investments is the preservation of capital to fulfill liquidity needs. We do not enter into investments for trading or speculative purposes. Based on the short-term nature of these investments, we believe there will be no associated material exposure toour holdings, future interest rate changes are not expected to have a material impact on our marketable securities.

Foreign Currency Risk

Presently, we operate our business primarily within the United States, with limited sales outside the United States. To date, we have executed the majority of our transactions in U.S. dollars. In the future, we anticipate expanding into Europe and other locations outside the United States. This expansion may include transacting business in currencies other than the U.S. Dollar. Despite this, we anticipate conducting limited activity outside the U.S. Dollar in the near term, and therefore foreign currency translation risk is not expected to have a material impact on our Consolidated Financial Statements. However, the growth of our operations, scope of transactions outside the United States, and the use of currencies other than the U.S. Dollar may grow in the future, at which point it is possible foreign currency translation will have a material effect on our operations. To date, we have not entered into any hedging arrangements with respect to foreign currency risk.

As our international operations grow, we will continue to reassess our approach to managing our risk relating to fluctuations in currency rates.

ITEM 4. CONTROLS AND PROCEDURES

Item 4.Controls and Procedures


Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 under Based on the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as of September 30, 2020. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.

effective as of March 31, 2024.


Changes in Internal Control Overover Financial Reporting

During the most recently completed fiscal quarter, there has been


There were no changechanges in our internal control over financial reporting during the quarter ended March 31, 2024 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.



PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1.
LEGAL PROCEEDINGS.

From time to time, the Company is engaged in legal proceedings in the ordinary course of business. For further information on the Company’s legal proceedings, please refer to Note 15. Commitments and Contingencies, in the notes to the Condensed Consolidated Financial Statements.

ITEM 1A. RISK FACTORS.

Factors that could cause our actual
ITEM 1A.RISK FACTORS.


Our business, results of operations, financial condition and cash flows are subject to differ materially from those in this Quarterly Report are any ofvarious risks and uncertainties including the risksrisk factors described under the caption “Risk Factors” in our final prospectusAnnual Report on Form 10-K for our Initial Public Offering filedthe year ended December 31, 2023, filed with the SEC on September 4, 2020. AnyFebruary 29, 2024, and the risk factor described below.

We rely on certain contract manufacturers to manufacture and supply our instruments, components of our instruments, and certain components of our consumable offerings. If these manufacturers should fail or not perform satisfactorily, our ability to commercialize and supply our instruments and consumable offerings would be adversely affected.

We rely on certain contract manufacturers to manufacture and supply our instruments, components of our instruments, and certain components of our consumable offerings. Since most of our contracts with these manufacturers do not commit them to carry inventory or make available any particular quantities, these manufacturers may give other customers’ needs higher priority than ours, and we may not be able to obtain adequate supplies in a timely manner or on commercially reasonable terms. Further, if these manufacturers are unable to obtain critical components used in our instruments or supply our instruments on the timelines we require, our business and commercialization efforts would be harmed. For example, in November 2023 we began a process of transitioning the manufacturing of our Platinum® instrument to a new provider. Transitioning this process could take more time than anticipated and run into technical challenges, and may ultimately prove to be unsuccessful. If we are unable to begin manufacturing at this new contract manufacturer in a timely fashion, it will affect our ability to produce Platinum® instruments which would harm our research and development efforts and commercial operations.

In the event it becomes necessary to utilize a different contract manufacturer for our products or components of our products, we would experience additional costs, delays and difficulties in doing so as a result of identifying and entering into an agreement with a new manufacturer as well as preparing such new manufacturer to meet the logistical requirements associated with manufacturing our instruments and consumable offerings, and our business would suffer. In addition, if our products are authorized for use by the FDA as medical devices, we will need to contract with FDA-registered device establishments that are able to comply with current Good Manufacturing Practice requirements that are set forth in the QSR, unless explicitly exempted by regulation.

In addition, certain of the components and consumables used in our instruments and consumable offerings are sourced from a limited number, or sole source suppliers. If we were to lose such a supplier, there can be no assurance that we will be able to identify or enter into an agreement with an alternative supplier on a timely basis on acceptable terms, if at all. An interruption in our ability to sell and deliver instruments or consumable offerings to customers could occur if we encounter delays or difficulties in securing these components or consumables, or if the quality of the components or consumables supplied do not meet specifications, or if we cannot then obtain an acceptable substitute. Our suppliers have also been impacted by the COVID-19 pandemic, and in the past, we have experienced supply delays for critical hardware and instrumentation as a result. If any of these factors could result in a significant or material adverse effect onevents occur, our business, results of operations, or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or resultscondition and prospects could be harmed.

ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Unregistered Sales of operations. AsEquity Securities and Use of the dateProceeds

Not applicable.

Issuer Purchases of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for our Initial Public Offering filed with the SEC on September 4, 2020. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Equity Securities


Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On September 9, 2020, we consummated our Initial Public Offering of 11,500,000 Units, inclusive of underwriters’ election to fully exercise their over-allotment option, we sold an additional 1,500,000 Units. The Units were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $115,000,000. Cantor Fitzgerald & Co. acted as the sole book running manager of the offering. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-240283). The SEC declared the registration statement effective on September 3, 2020.

Simultaneously with the consummation of the Initial Public Offering and the option to purchase additional Units, we consummated a private placement of 405,000 Private Placement Units to our Sponsor at a price of $10.00 per Private Placement Unit, generating total proceeds of $4,050,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

Of the gross proceeds received from the Initial Public Offering and the full exercise of the option to purchase additional Units, $115,000,000 was placed in the Trust Account.

We paid a total of $2,300,000 in underwriting discounts and commissions and $472,377 for other offering costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $4,025,000 in underwriting discounts and commissions.

For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES.


Not applicable.


ITEM 4.
MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.OTHER INFORMATION.


10b5-1 Trading Arrangements

From time to time, our officers (as defined in Rule 16a-1(f) of the Exchange Act) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of Regulation S-K). During the three months ended March 31, 2024, none of our officers or directors adopted, modified or terminated any such trading arrangements.

ITEM 5. OTHER INFORMATION.

None. 

ITEM 6. EXHIBITS.

ITEM 6.EXHIBITS


The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.


No.
Exhibit
Number
Exhibit DescriptionFiled Herewith
Incorporated by
Reference Herein from
Form or Schedule
Filing Date
SEC File/​
Reg. Number
 Description of Exhibit
1.1 Underwriting Agreement, dated September 3, 2020, by and between the Company and Cantor Fitzgerald & Co. (1)
3.1 Amended and Restated Certificate of Incorporation. (1)
4.1 Warrant Agreement, dated September 3, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent. (1)
10.1 Letter Agreement, dated September 3, 2020, by and among the Company, its officers, its directors and HighCape Capital Acquisition LLC. (1)
 Investment Management Trust Agreement, dated September 3, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as trustee. (1)
10.3
Nonemployee Director Compensation Policy
 Registration Rights Agreement, dated September 3, 2020, by and among the Company, HighCape Capital Acquisition LLC and the other holders party thereto. (1)
10.4 Private Placement Units Purchase Agreement, dated September 3, 2020, by and among the Company and HighCape Capital Acquisition LLC. (1)
10.5Form 10-K (Exhibit 10.16) Administrative Services Agreement, dated September 3, 2020, by and between the Company and HighCape Capital Acquisition LLC. (1)
31.1*2/29/2024 001-39486
Certification of the Principal Executive Officer and Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuantpursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* X
Certification of the Principal ExecutiveFinancial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuantpursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** X
Certification of the Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuantpursuant to Section 906 of the Sarbanes-Oxley Act of 2002X
32.2** 
Certification of the Principal ExecutiveFinancial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuantpursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* X
101.INSInline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.CAL*​X 
101.SCHInline XBRL Taxonomy Extension Schema Document​X
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*​X XBRL Taxonomy Extension Schema Document
101.DEF* 
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*​X 
101.LABInline XBRL Taxonomy Extension LabelsLabel Linkbase Document
101.PRE*​X 
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document​X
104Cover Page Interactive Data File (embedded within the Inline XBRL document)​X


+Management contract or compensatory plan or arrangement.

*Filed herewith.
**Furnished herewith.
(1)Previously filedThe certifications attached as an exhibit to our CurrentExhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 8-K10-Q are not deemed filed on September 9, 2020with the Securities and Exchange Commission and are not to be incorporated by reference herein.into any filing of Quantum-Si Incorporated under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Form 10-Q), irrespective of any general incorporation language contained in such filing.

18


SIGNATURESSIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 HIGHCAPE CAPITAL ACQUISITION CORP.QUANTUM-SI INCORPORATED
   
Date: November 12, 2020May 9, 2024By:
/s/ Jeffrey Hawkins
 /s/ Kevin Rakin
Name:Kevin Rakin
Title:Chief Executive Officer
  (PrincipalJeffrey Hawkins
President and Chief Executive Officer)
   
Date: November 12, 2020May 9, 2024By:
/s/ Jeffry Keyes
 /s/ Matt Zuga
Name: Matt Zuga
Title:Chief Financial Officer
  (PrincipalJeffry Keyes
Chief Financial Officer and Accounting Officer)Treasurer




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